It predicts that Australia is set to become a critical minerals refining hub, with 10 per cent of the world’s total lithium hydroxide refining capacity by 2024, doubling to 20 per cent by 2027.

Nick Harridge, KPMG’s national leader for mining and metals, said he expected to see a “significant volume of investment” in both lithium mining and refining on the back of rising prices fuelled by the global increase in demand for electric cars.

The KPMG report estimates that more than two billion electric vehicles will be needed to accommodate a transition from internal combustion engines by 2050.

“On that basis, the production of critical minerals used in battery technologies will also need to increase substantially,” it says.

“The incentive to increase lithium mining is set to rise,” Mr Harridge said. “That means not just production but also refining.”

Australia currently produces just under half of the global supply of lithium. While Australia has historically exported unrefined lithium to China – which refines it for use in batteries – Mr Harridge said Australia was now investing in lithium refineries.

There currently an estimated $7bn worth of capital spending decisions on some 11 to 12 lithium projects in Australia, he added.

Lithium refining is relatively new in Australia which currently represents less than two per cent of global refining capacity.

“By 2024 Australia should have about 10 per cent of global lithium hydroxide refining capacity, rising to about 20 per cent of global lithium refining by 2027,” Mr Harridge said adding that buyers were prepared to pay for product which was mined and refined in a sustainable way with “green credentials” such as using renewable energy.

“Given the higher price for refined lithium – even more for lithium with sustainability credentials – the increase in lithium refineries in Australia should help support investment in lithium mining in the years ahead,” Mr Harridge said. “We expect Australia to maintain a high share of the global supply of lithium in the decades ahead.”

The report says investment in critical minerals is expected to be one of the big driving forces in the mining sector in Australia next year, with Australia set to emerge as a critical minerals refining hub.

It estimates that global production of lithium carbonate is expected to rise to 1000kt by 2024, almost double the current level of around 550kt.

The report says there could be improvements in technology which could reduce the volume of lithium required for car batteries.

Despite this, it says, “overall lithium demand will remain high in the near term and strong investment will be needed to ensure that the production of new and circular minerals keeps up with the level of demand”.

The KPMG report said the global push to decarbonisation was a major force in the metals and mining industry with more than three quarters of the 322 mining companies surveyed having set net zero targets for carbon emissions. Almost 70 per cent aimed to achieve these by 2030.

KPMG Australia’s national decarbonisation transformation leader, Cle-Anne Gabriel, said the demand for critical minerals for decarbonisation was already outstripping supply. “(It) is already an area of geopolitical rivalry … creating unpredictability in markets,” Dr Gabriel said.